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Relaxed visa rules may help but experts say much more is needed

Abe hopes to roll out red carpet for foreign startups

by Kazuaki Nagata

Staff Writer

To attract more foreign investment and help grow the economy, Japan is looking to encourage more foreigners to start their own businesses in Japan by easing visa requirements in specially designated zones.

The most common way to start a business here is to get an investor/business manager visa. But applicants must first secure office space and have at least ¥5 million on hand to invest in the business or hire at least two full-time workers before they even apply for it.

According to the draft of Prime Minister Shinzo Abe’s revised growth strategy, however, the government plans to provide a moratorium on the visa application requirements, giving applicants time to raise funds and hire local staff.

How long the grace period will be hasn’t been decided yet, but some media reports say it will be one to two years.

Experts and foreign business owners, however, doubt that the moratorium will be enough incentive to motivate foreigners to start businesses here.

“I don’t think it’ll change the situation a lot,” said Dao Duy An, a 35-year-old Vietnamese who runs Coprona, a Kanagawa-based company that supports small and midsize firms aiming to enter the Vietnamese market.

For some, it is hard to come up with ¥5 million or find suitable staff until the business gets firmly established. As many have found out, it often takes new ventures years to turn a profit.

An, who founded Coprona in 2011 with 14 Japanese, said he still hasn’t been able to hire a full-time employee since he became president in June 2013.

“I had a hard time dealing with the visa issue,” he said.

After finishing his graduate studies, An worked at a construction firm in Japan for five years before teaming up with Japanese people to establish Coprana.

Since An entered Japan on a technical visa, he found that he needed to change his visa status after becoming president last year.

In Japan, there are basically three ways for foreigners to run a company.

One is to have an investor/business manager visa. The second is to receive permanent residency and the third avenue is to marry a Japanese.

An planned to get an investor/business manager visa but couldn’t, since he could not come up with the necessary ¥5 million. Fortunately, he had been in Japan for more than 15 years and had five years’ working experience, which allowed him to successfully apply for permanent residency.

“I was lucky that I could get permanent residency, but many international students who have just graduated from college and want to start a business can’t get permanent residency,” and it is also difficult for them to raise ¥5 million, An said.

Even with a one- or two-year grace period, it will still be tough to obtain ¥5 million or hire two full-time employees, he said.

And when it comes to hiring Japanese staff, foreign entrepreneurs often run into several obstacles unless their businesses have already developed a solid reputation.

Typically, Japanese are looking for stable, long-term employment rather than jobs at small ventures run by foreigners, because it is unclear whether the business will take off and ultimately succeed, said Takehiko Mutaguchi, senior managing director at the nonprofit Initiative for Development of Entrepreneurship in Asia.

“There are many Japanese who can’t really work outside Japan’s unique culture. This is making the environment for foreigners to start a business here tougher,” since they can’t hire talented natives, Mutaguchi said.

The Kanagawa-based Initiative for Development of Entrepreneurship in Asia is teaming up with Kawasaki to help Asians who want to start businesses in the city.

Mutaguchi said the NPO has helped found more than 30 venture firms for foreigners in Japan, but they have hard time hiring Japanese people.

Masashi Miyagawa, manager at Tokyo-based Acroseed Co., which provides consulting services on matters related to foreign labor, agrees that the government’s plan doesn’t sound bold enough.

“I was expecting that, if Japan is serious about (encouraging more foreigners to start a business here), they would eliminate (the ¥5 million requirement),” because it is a policy that will be implemented only on a limited scale inside the special zones, said Miyagawa.

While Miyagawa said it is a good idea to ease visa requirements in the special zones, the ¥5 million requirement doesn’t necessarily seem to be a high obstacle from his consulting experience.

If people are really serious about launching a business, they usually prepare a certain amount of capital, and ¥5 million is not excessive, he said.

Also, the ¥5 million and office space requirements serve as a kind of filter to prevent people seeking visas from engaging in illegal activities, he said.

The immigration office strictly checks the criteria to see whether applicants are really serious about doing business here or have other motives.

Miyagawa suggests that rather than just easing visa requirements in all cases, it would probably be better to introduce additional criteria. That’s because the application process is the same for international students who have just graduated and want to found a company as it is for those who have been appointed to head the Japanese branch of a Nasdaq-listed firm.

“For instance, if an applicant’s firm is listed on the Nasdaq, I don’t think a strict evaluation process is needed . . . there are cases where it takes two months to issue a visa to (such people),” Miyagawa said.

Mutaguchi said while requirements like the ¥5 million rule are obstacles, Japan also needs to improve the business environment for foreigners.

For instance, many non-Japanese tend to have a difficult time renting apartments, and their family members are also often unable to speak Japanese.

Thus, there should be more coordinators — such as NPOs like his own — that can offer support and help them adjust to life in Japan, Mutaguchi said.

An agreed that more support groups would be helpful.

“Venture firms generally do not have high credibility, so their business proposals are often not taken seriously by other firms, and if the firms are headed by foreigners,” many turn skeptical, An said.

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